And just to be realistic about that then, any fire-type Pokemon that make it in SSB4 (assuming we have more than one Trainer) can't go underwater. They can swim on the surface, but they won't actually go underwater... Don't tell me the level would then be "unbeatable" then, since there's a freaken Water-type that comes along with those fire types, plus another Grass-type that you could take advantage of.

When underwater, the controls are generally the same as they are in the air. This means that characters can only attack using their Aerials and Specials. Any attacks that can only be used on the ground (such as Pokemon Change or Turnip Pluck) can't be used underwater unless on a flat surface. If Charizard or Blaziken are changed into underwater, they automatically change again to a different Pokemon. There are a few differences though between air and water:

-Movement is slightly slower in water than it is air
-Underwater, you have to find air bubbles so it is possible to continue breathing. If you run out of oxygen, then your character will drown, which is basically the same thing as what happens when your character dies in a Stamina match.
-If you use a move that makes you go into falling animation (in Captain Falcon's example, Falcon Dive or Raptor Boost), right where the falling animation would start, Captain Falcon would go back into swimming animation. This means you can infinitely use those moves without falling. You should take caution not to use moves you can't get out of (such as Bowser's Bowser Bomb or Ike's Aether) in the case there is no solid ground underneath you, getting you KO'd. You still have the option to use them, but like I say, Smash Bros. is also part strategy, so it's your fault if you get yourself killed.

The only characters that can infinitely breath underwater are Kirby (since he automatically wears his swimming goggles when he enters water, a reference to his games), Olimar (since he is wearing a space-suit that technically works as a scubadiving suit as well, proven by being able to stay underwater forever in deep pools in Pikmin 2), Squirtle and Mudkip (being Water-types, meaning that they don't necessarily need oxygen), and Starfy (being that every one of his games include water that he can stay in forever).

Explaining it makes it sound bigger than it really is. It's nothing extremely special, just a new game mechanic is all.